Avoiding the fees discussion is core to the consulting sales schtick when investigating Dynamics 365 pricing. Or this is what many who have ventured into these often murky waters have come to believe. If you’ve ever inquired about consulting fees for an ERP or CRM implementation, it’s likely you didn’t get a straight answer. Maybe you heard something like “it depends” or were presented with a range so large as to be unhelpful. Or maybe you were told that pricing is complex because it’s based on the consulting hours, and it’s tricky to know in advance due to the myriad of variables at play.
At Catapult we understand that this is the way the game is traditionally played, and we’ve found a way to do better. Much better in fact. It’s called Bundled Subscription Pricing. We want to demystify fees and make them both transparent and predictable. We believe that in a world of enterprise software in the cloud, customers want confidence that their investments are directly tied to meaningful business outcomes.
Consulting firms face a major difficulty when they disclose their fees – they can lose control of the conversation if the prospect experiences sticker shock. So better to keep the dialogue going, focusing on requirements and capabilities and benefits, building buy-in and rapport before dropping the price bombshell. Of course, even the best and most experienced consulting firms cannot predict the effort required to deploy a solution for your business with complete accuracy, regardless of how many times they’ve done it before.
We’re here to tell you that enterprise software implementation has never been more predictable, as the emphasis shifts to standard, configurable capabilities over customization and the technical factors – servers, connectivity, APIs, etc. shift from customers to software vendors. Adopting a new enterprise software platform will always mean stepping into the unknown and embracing change, but that change should not amount to unpredictable investments and runaway costs.
What was that about Bundled Subscriptions?
Enterprise software investments fall into three categories:
- Software and hardware costs – Traditionally purchased outright and capitalized, these costs have transitioned to Software-as-a-Service models where customers pay a monthly fee based on users, transactions, or another consumption metric. Access to the software is guaranteed by the vendor who manages all of the required technical infrastructure and provides secure access using a browser or dedicated app, communicating to databases in the cloud.
- Implementation costs – These are fees paid to consultants and contractors for their effort and expertise, methodologies, guidance, project management and artifacts. Most consulting firms charge for services on an hourly basis (typically hundreds of dollars per hour), most often tied to an agreed budget and scope. These contracts are notoriously risky for customers because there is no guarantee of success and costs go up in proportion to the effort and time it takes. We rarely hear about implementations coming in under budget! For consulting firms these engagements are gold, as more than 80% of the customer lifetime value is billed before the go-live.
- Support and Maintenance – Enterprise software has to be monitored, maintained, upgraded and optimized to ensure there is no disruption to the business. Like the implementation fees, these investments are typically paid to consulting firms based on billable hours to perform the required services. Also, the activities associated with support are typically reactive, leaving customers to determine what they need and when they need it.
Bundled subscription pricing is a unique approach designed to overcome the inherent limitations, risks and issues with traditional business models. Just as SaaS changed the way customers think about and consume software capabilities, Bundled Subscriptions change the way customers consume, and pay for the expertise, know-how, methodology and effort associated with getting up and running, and maintaining systems. In a Bundled Subscription, customers pay a single monthly or annual fee that includes SaaS licensing, implementation services, and ongoing support. Factors that affect the monthly fee include:
- The number of software users – each user represents a software license and sometimes there are different types of licenses.
- The scope of capabilities being implemented – each module or capability being configured represents discrete services that must be provided by the consulting partner. A portion of the subscription fee is allocated to the consulting partner’s cost associated with initial setup, training and deployment.
- The type of support services provided – some customers require only basic monitoring and system administration while others require upgrades and on-demand access to subject matter experts. Some of the subscription fee is allocated to a Service Level Agreement (SLA) with specific performance guarantees.
Pricing in a Bundled Subscription framework thus becomes a function of the underlying items of value the customer needs. In this context consulting effort is not the budget driver and customers can take comfort knowing upfront exactly what they will pay for the outcomes they value.
Bundled Subscription Benefits
Bundled subscriptions have many benefits over traditional enterprise software engagement models.
- Transparency – Bundled Subscriptions provide clear line of sight between investments and value drivers. Customers are provided with accurate pricing upfront based on the software, capabilities and support services requested.
- Predictability – Bundled Subscriptions are fixed-fee. They do not vary based on the consulting time invested once the engagement begins. The only thing that can change a bundled subscription fee is new scope added after the project starts. Customers do not need to budget for contingency.
- Accountability – In a Bundled Subscription it is the consultant who has to bear the significant upfront cost associated with implementation since fees are paid on a straight-line basis over a longer term. By the time the customer is ready to go-live, their consulting partner has only received a small portion of its overall fees. In order to recover their cost and earn a profit margin on the engagement, the partner must deliver a successful outcome and maintain high levels of satisfaction for the duration of the term.
- Support – Bundled Subscriptions include the support required to ensure long-term success. For most customers go-live is a challenging time as the business embraces new capabilities and processes. Ongoing access to experts coupled with support services designed to drive user and business adoption significantly increase the chances of realizing the transformational power of cloud software.
- Proactive – By the time you reach out to your consulting partner in need of support, it’s often too late. Problems have occurred and the business is experiencing disruption. Bundled managed services require the consulting partner to execute defined support programs like Hypercare, Month-End Close Assist, and Upgrade Management on a set schedule.
Moving Away from Traditional Enterprise Software Consulting
Even though SaaS has tremendous benefits, it’s not always possible for businesses to fully reap them if they don’t have the right support from their consulting partner. At Catapult, we know how important it is to deliver customer success and earn their loyalty. We believe that we should only earn a profit when our customers realize their vision for business improvement and digital transformation.
With Bundled Subscriptions our team of amazing consultants and solution experts becomes truly empowered to create a customer experience journey that personalizes and deepens the relationship with customers from initial discovery through implementation, adoption, upgrades and add-ons, new services, and renewals. Our simplified fee model covers everything you need and allows us to work with our customers to continually optimize business processes. Our commitment to your success is more than just words, it’s baked right into our engagement model. We succeed when we help you achieve success.
Get a Subscription Quote (no strings attached)
Our subscription builder is an online app that helps organizations customize and price their own Dynamics 365 solution in just a minute or two. Simply choose your application, select the capabilities that apply to your business, the number of user licenses you require, and your desired support. Our app will then calculate all of your requirements and provide you with a customized quote. The purpose of this subscription builder is to help businesses get more insight into Dynamics 365 pricing. We’re here to help, whether you’re simply doing research into pricing or whether you’d like to talk in more detail with one of our ERP and CRM experts.